[Answered] What is the United States Creating Helpful Incentives to Produce Semiconductors and Science Act of 2022 (CHIPS Act)? Discuss the lessons that India can learn from the CHIPS Act for executing its semiconductor strategy

Introduction: Give brief context of CHIPS Act.

Body: What are its key features and lessons that India can learn from this Act for its semiconductor mission?

Conclusion: Way forward.

The Creating Helpful Incentives to Produce Semiconductors and Science Act (CHIPS) Act seeks to offer $280 billion in aid and subsidies, with a special emphasis on the country’s semiconductor industry, which is being threatened by China. The bill would give US chip manufacturers “$52 billion in subsidies and additional tax credits” in addition to another $200 billion for scientific research, particularly in artificial intelligence and other cutting-edge technology.

Key features of the Act:

  • Reduce dependence on China: A global shortage of semiconductors or chips led to the recognition that the US needed its substantial manufacturing & reduced its dependence on China. 75% of world semiconductor demand is met by countries of East ASIA, particularly Taiwan, Korea & China.
  • National security: It will strengthen US national security by making tech companies less dependent on foreign sources of semiconductors which are known to be used in critical sectors of the economy.

What can India learn from CHIPS Act for executing its semiconductor strategy?

  • US-India Initiative on Critical and Emerging Technologies (iCET):  Both countries agreed to enhance bilateral collaboration on resilient supply chains, support the development of a semiconductor design, manufacturing, and fabrication ecosystem in India, and promote the development of a skilled workforce for the industry.
  • Inter-Ministerial coordination: The CHIPS Act highlights cooperation and coordination between several arms of the government. Central government must ensure cooperation between the Ministry of Commerce, defence and external affairs, and major scientific institutions for accelerating semiconductor manufacturing and research.
  • Focus on Technocrats:  India Semiconductor Mission (ISM) has been set up by MeitY, which is largely dominated by career bureaucrats while the CHIPS Act requires the overwhelming presence of technocrats or subject experts cooperating alongside government efforts.
  • Link between Academia and Industry: In line with the National Semiconductor Technology Centre (NSTC) of USA, Meity has created the Chips2 Startup (C2S) programme which aims to collaborate with industry and educational institutions.
  • Transparency and Accountability: Along the lines of the CHIPS Program Office (CPO), there should be a body to lay down the guidelines for assessing the financial viability of a project, and display regular monthly reports on the semiconductor program which will enhance transparency and accountability.

Conclusion:

India needs to make concerted efforts to identify and invest in research on future technologies. For eg, India needs to prioritise and focus on high volume chip manufacturing and packaging research to ensure the success of its India Semiconductor Mission (ISM).

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